ITR alert! 5 things employees must keep in mind before filing Income Tax Returns

With three income tax returns forms already out, the ITR filing season is gathering pace. While the ITR filing deadline for assessment year 2018-19 is July 31, 2018, it is advisable to plan your finances well in advance to avoid last-minute hassle. To help you with that, we have compiled five key tasks that you must complete before getting on with filing income tax returns:

1) Collect Form 16 from your employer: Form 16, also known as tax withholding certificate, is issued by your employer and summarises your income from salary and tax deducted at source. Divya Baweja, Partner – Deloitte India suggests individuals need to ensure that they have received the Form 16 from their employers. In case they have switched jobs during the financial year, then they must also make sure that they have received the Form 16 from his previous employer, adds Baweja.

2) Income from house property: If you have two houses, the provisions of Income Tax Act, 1961 require you to keep the second property on rent. In that case, details for the rent received and receipts of municipal taxes paid during the year would be required. If the same is financed by a loan, the copy of loan certificates to track the interest and principal would also be required.

In order to determine the taxable value of the same, Baweja suggests, individuals need to determine the following: i) Municipal value of the property, ii) Fair rent, which is equal to rent that a similar property can fetch in the same or similar locality if rented out for a year, and iii) Standard rent, as fixed under the Rent Control Act. 

3) Income from capital gain/other sources: "An individual needs to collate all the documents in respect of any transaction of sale of capital assets (e.g. shares, mutual funds, house property, etc) done during the year to compute the capital gain/loss," said  Baweja, adding he/she should also collate the documents in relation to other income such as savings bank interest, fixed deposits interest, and dividends, etc. 

Please note that savings bank interest of upto Rs 10,000 is exempt from tax. However, it is mandatory to report the same in tax return even if it is less than Rs 10,000.

4) Tax Deducted at Source (TDS) and Form 26AS: Taxpayers must have an idead of the tax credit or the tax that has been deducted on his behalf in the form of TDS. This information is available in Form 26AS and can be downloaded from the Income Tax website.

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"An individual needs to verify whether the tax deducted on his behalf/ advance tax paid by him has been credited to his PAN by checking the Form 26AS online. If there is any discrepancy, he need to notify the deductor and get it rectified. The tax authorities would only grant the credit of taxes which is appearing in the Form 26AS," said Baweja of Deloitte India.  

5) Deductions: Subsequent to submitting declaration to the employer, sometimes an individual make additional investments which are eligible for deductions from gross taxable income. "These details do not get captured in the Form 16. Accordingly, the necessary documents/receipts should be kept ready to ensure that the relevant details are captured in the tax return," suggested Baweja.